Question

conduct a breakeven analysis for the following project :

	A
Invesment (OR)	888340.95
to be sold unit /year	32000
variable cost OR/unit	1.596
selling price OR/unit	25
Annual expenses/year	499517
MV (OR)	200000
useful life	10

Answer 1

Contribution Per Unit = Selling Price - Variable Cost per unit

                               = 25-1.596 = 23.404

Annual Fixed Expenses = Annual Expenses + Depreciation

                                    = 499517 + (200,000/10)

                                    =499,517+20,000 = 519,517

Brek Even Number of Units to sold is when the contribution from sales = Total Annual Fixed Expenses

                                                         23.404*Number of Units = 519,517

Number of Units = 519,517/23.404 = 22,198 units

If we sell 22,198 units the profit for the year will be 0, hence breakeven.